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CA Foundation · Business Laws · The Sale of Goods Act, 1930

Kiran Steels agrees in writing on 1 March to sell 10 tonnes of steel rods to Deepak Constructions, with delivery and payment on 1 June. Property in the rods is to pass only on delivery. How is the contract on 1 March best described?

It is an agreement to sell. Under the Sale of Goods Act, 1930, when the transfer of property in the goods is to occur at a future time or after a condition is met, the contract is an agreement to sell. It becomes a sale when property passes on delivery.

  1. AA sale, because the contract is in writing
  2. BAn agreement to sell, because the transfer of property is to take place at a future timeCorrect
  3. CA sale, because the price has been fixed
  4. DA void contract, because delivery is postponed

Explanation

Where property in goods is to be transferred at a future time or on a condition to be fulfilled later, the contract is an agreement to sell. Here property passes only on delivery in June. Option A is wrong because writing does not decide the character, and option C is wrong because a fixed price is needed in both sale and agreement to sell.

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